Your ‘home loan guarantor’ will provide a guarantee for your loan that is linked to their property. In most cases, guarantors are parents who are helping their kids purchase their first home. Many Australians are using this strategy so they can get into the property market now, and benefit from future potential capital gains. The guarantor can later request to remove the guarantee if you have paid off the loan in full, or if your property has increased in sufficient value to bring the loan to value ratio (LVR) down to within normally accepted parameters.
Guarantor loans are becoming more popular in Australia, mainly because of the benefits that borrowers may take advantage such as:
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